Thailand: Crop zoning on the horizon

A major overhaul planned for Thailand’s agricultural sector next year will see the government roll out a zoning initiative as part of a two-pronged bid to optimise crop production and reduce expenditure on price-support schemes.

Under the proposals, farmers will be handed incentives for planting crops best suited to their locations, while others who choose against taking up recommendations could lose their subsidies.

The initiative covers six of Thailand’s staple crops - rice, tapioca, sugar cane, maize, rubber and oil palm - which all make a vital contribution to the national economy. The six crops combined account for almost 55% of agriculture’s GDP, providing income for around 3.7m farmers and millions of agricultural labourers.

While Thailand has been mulling the idea of introducing crop-zoning across its agricultural sector since 2010, mounting problems in the rice industry have prompted the government to prioritise the initiative.

Stockpiles of rice and plunging exports followed a pre-election commitment by Prime Minister Yingluck Shinawatra’s government to support growers by buying all crops at above set-market prices. While proving popular with farmers, the move has driven up Thailand’s rice prices, making exports more expensive than those of its rivals. Rice exports fell by 37% in 2012, according to data issued by the Ministry of Commerce, while Vietnam recently edged Thailand as the world’s top rice exporter.

Thai Commerce Minister Boonsong Teriyapirom announced on April 2 that the state planned to sell up to 7m tonnes of rice to fund the next round of domestic grain purchases in a move that could impact international prices if Bangkok chooses to reduce its stockpile by offering it at a discounted rate.

Thailand hopes its zoning scheme will reduce the amount of land being used for rice cultivation, while still maintaining high output and a quality product. According to studies by the Agriculture Ministry, only around 20% of the almost 9.4m ha of land being used to grow rice is best suited for the crop.

The agriculture minister, Yukol Limlaemthong, is confident that the zoning policy, if fully implemented, could all but eliminate the cost of state support schemes for rice, rubber and corn, which estimates suggest could be as much as $6bn a year.

A memorandum of understanding signed in early April by the Ministry of Agriculture and Cooperatives and the Geo-Informatics and Space Technology Development Agency (GISTDA) will allow Thailand to utilise advanced technology and satellite data in its agriculture-zoning programme. “Satellite data can be widely applied in various means to benefit agriculture such as zoning of the agricultural land usage, promoting the government’s agricultural policy, helping farmers affected by natural disaster, and pest control,” Chavalit Chookajorn, the ministry’s permanent secretary, told local media.

By plotting Thailand’s farmland more efficiently, officials hope they will be better equipped to determine crop suitability across zoned areas and gauge the infrastructure and support mechanisms needed to boost crop development.

The move towards zoning in the agricultural sector comes on the back of an announcement that another state agency also plans to overhaul its policy for supporting industrial activity, including agricultural processing. At the beginning of April, the Board of Investment said it planned to replace its current investment promotion policy, which is based on a zoning system, with a strategy focusing on the development of regional clusters.

Observers have questioned whether the strategy, which is scheduled to be unveiled in July this year, could impact Thailand’s agricultural sector, since the board has proposed a revision of its support for the food and agricultural processing industries. Coordinated planning will be required to ensure that the processing clusters are either based near or logistically linked to their raw material sources in the agricultural zones to maximise production efficiency.

Although there are no plans at present to make planting of recommended crops in designated zones mandatory, the government has made it clear that farmers who take up the suggestions laid out in its new agricultural policy will be in line for additional incentives, while others could see their subsidies cut.

The zoning programme should bring savings over time. However, there will be additional costs in the shorter term in the form of training for farmers, infrastructural adaptations and payments to growers who chose to follow the state’s advice. The government has said it will allocate funds to support the scheme in the national budget.

If the incentives are sufficiently appealing to attract growers and counter the cost of shifting to new crops, Thailand could be on track to develop a more efficient and productive agriculture sector.